Whether You’re Selling a Trade Secret Asset or Recovering Damages for the Disclosure of One It’s Important to Understand the Tax Character of the Proceeds
In a knowledge-based economy trade secrets play an ever more important role. From recipes to software to chemical processes the true value of a modern company resides in its ability to do things few others can. So when a trade secret is sold or wrongly disclosed there can be a significant impact to both the owner’s future earning potential and its balance sheet.
Failing to recognize the true tax character of that impact can lead to serious, long-term problems. In the September, 2012 issue of Tax Strategies I published an article discussing a case in point. It includes a discussion of the economic value of a trade secret and its tax character.
It also discusses the tax aspects of settlement agreements, and can serve as a cautionary tale for those now litigating in this area. For some folks, it seems, winning can be just the beginning of a long, hard slog.
To read the full article click here: The Perils of Winning.
I hope you find it useful.
This article is for informational purposes only and does not constitute legal advice. You should consult a qualified attorney before taking any action.